Drop the 25% Fee Increase, Meet Obamacare Standards in 2013

Dear President Yudof,

The health of every UC student is precious and essential to our learning. So we are deeply disturbed that the UC Student Health Insurance Plan (UC SHIP) lost tens of millions of dollars last year because of financial mismanagement. Likewise, we are concerned that UC has not yet committed to meet Obamacare standards by providing all free preventative healthcare services required by Obamacare and eliminating caps on lifesaving care in 2013.

But we are perhaps most troubled that top executives from the offices of the CFO and Health Services are meeting behind closed doors to rush through a fee hike of up to 25% that would stick students with the bill for management missteps. We cannot abide that such decisions be left to executive decision-making. After all, the responsibility for UC SHIP’s losses lies with the same executives now deliberating in backrooms at UCOP.

More than 5,000 students and student-workers have filled out surveys about UC SHIP, and they overwhelmingly want the plan to have lower enrollment fees and meet Obamacare standards. In contrast, a 25% fee increase for UC SHIP would increase annual fees for students by $400 to $600.[1] This would be the largest tuition and fee increase at UC of any kind in two years.

A $600 fee increase would violate the spirit of AB 970, the newly implemented Working Families Student Fee Transparency and Accountability Act. Such a fee increase would also violate recent commitments by UCOP and the UC Regents to students, taxpayers, and the Governor. After students and taxpayers passed Prop 30 to give UC additional funds, this fee increase would shake our confidence in UC by making us pay even more for executive mismanagement.

A massive increase in UC SHIP fees could also further destabilize the plan by leading to adverse selection in which only the students and campuses most in need of costly care remain in the plan. This would lead to further losses and jeopardize stable, quality care for students. Some campuses are already questioning if they should remain in the plan. Beginning January 1st, 2014, the California Benefit Exchanges will offer new options for students with much lower premiums than UC SHIP’s current enrollment fees. TAs, Readers, and Tutors are thus also considering if we should negotiate for UC to provide higher stipends as an alternative to employer paid SHIP enrollment fees. Together these factors could lead to an exodus of students from the SHIP plan that neither the CFO nor Health Services appear to take seriously.

If UC SHIP does not eliminate its caps on lifesaving care, those students who exceed the caps but do not qualify for Medi-Cal, spousal, or employer plans may have no other choice than to drop out of UC in order to qualify for affordable assurance. This is because persons are not eligible to purchase Exchange Plans if they are offered plans that qualify as minimum essential coverage as is proposed for UC SHIP under a new rule from the Centers for Medicare & Medicaid Services (CMS), HHS. [2] Accordingly, we ask for a commitment that the CFO and Health Services will move to eliminate UC SHIP caps in 2013 rather than establish a policy of forcing students with catastrophic medical situations to drop out of the university.

Finally, management has not yet committed to offering coverage of all free preventative healthcare services, including important services for women and pregnant women. Such free preventative services reduce healthcare costs by reducing the risk of more expensive care for medical situations that can be prevented. So we also ask for a commitment from the CFO and Health Services that UC SHIP will begin in 2013 to provide free coverage for all preventatives services required by Obamacare.

Now, more than ever, our community should take all necessary time to investigate UC SHIP’s losses, evaluate our options, and include all stakeholders in deciding the best course moving forward. We ask you for four commitments for such a process:

Management should begin joint discussions and meetings with the three organizations representing plan members: the UC SHIP Advisory Board, the UC Student Association, and the UC Student-Workers Union-UAW together.

Management should provide to all three of these organizations with all documents, actuarial data, and analysis regarding UC SHIP fee rates and benefit changes, including all changes necessary to meet Obamacare standards.

Management should provide make all data requested by our organizations thus far available to all students. You have still not provided data requested as far back as December 13th, 2012.

We believe four points should guide this process:

While UC SHIP lost money in the last year, UC medical centers made $900 million in profits. These resources, not students, should pay to offset losses from mismanagement of UC SHIP.

The Senior Vice President of Health Services, Jack Stobo, received more than $700,000 in compensation last year, including a $180,000 performance bonus. Executive pay and bloat should be reallocated to shore up UC SHIP while executive performance is reevaluated in light of UC SHIP’s losses.

UC SHIP fees should not be increased based on the last year of losses. As a $22 billion a year organization with immense borrowing capacity, UC should subsidize and capitalize the UC SHIP to move forward with affordable enrollment fees while we study how to best stabilize the plan financially and balance it with UC’s other priorities.

UC SHIP should be improved to meet all Obamacare standards in 2013. Failure to remove caps on coverage could keep students without coverage for lifesaving care and could even leave some students uninsurable if they don’t qualify for Medi-Cal or a spousal, or employer plan. Most students, like Kenya Wheeler and Micha Rahder don’t know about these dangers until it is too late.

We hope you will respond as soon as possible to agree that you will direct the CFO and Health Services executives to begin the inclusive process we propose.